Great Graphic: US Labor Market

Here are two Great Graphs from Bill McBride at Calculated Risk blog. The first captures the dramatic magnitude of US job losses in the Great Recession. It was clearly unprecedented in the post-WWII experience. Businesses slashed employment quicker and deeper than before. They have also been slower to expand their workforce. By this time in every other cycle, employment had recouped the losses incurred during the recession. The pace of job growth has been exceptionally steady, despite heterodox easing by the Federal Reserve and the massive expansion of its balance sheet. If this pace is maintained, it will take the better part of the next two years to recover the number of jobs lost in the Great Recession. On the other hand, we note that the US economy is one of the few high income economies in which GDP surpassed the pre-crisis peak. The second graph compares the current (November) unemployment rate in the 50 states to the peak. All the states have seen their unemployment rates fall. Only four states have unemployment rates below the 6.5% threshold the FOMC has identified as a key to their pledge to keep interest rates low. A few states stand out. Michigan, for example, had the highest unemployment rate at the worst of the Great Recession and it has slipped to 6th place. At its worst, South Carolina had the third highest unemployment rate. Now it is 14th. Ohio has also moved from among the highest to the lower half. The improvement in all three appears to reflect, to some extent, the recovery of the auto sector. US auto sales increased 15% in 2011 and another 15% in 2012.